Growing up I wasn’t interested in being an entrepreneur because I was a very cautious kid and I thought entrepreneurs were risk-loving daredevils. Didn’t sound like my gig at all.

After leaving college for an ill-fated stint working for my dad, I needed an income. I decided to take a shot at freelance software development, my most marketable skill. So, true to form, I went about it in the least risky way I could. I bought no furniture, I rented no office. I used the computer I already had, set it up on an old kitchen table and that was my basement office. A few wires connected me by phone and Internet to the outside world and I was good to go.

My cautious little business was profitable and cash-flow positive its first week in existence. And the first month, and year. Eventually I realized that caution in business is a good thing, and daredevil instincts are not required (or even recommended). My childhood perception of entrepreneurs as risk-lovers was simply a misconception. So I became more confident in my cautious way of doing business and stuck with it.

I was a little bothered though because I thought the word entrepreneur was etymologically related to the word intrepid, which means fearless or dauntless. Well, I should have checked the dictionary. I did today and it turns out the word entrepreneur originates from words meaning “one who undertakes something”. It’s about initiative, not risk. Now initiative, that is an essential quality of a successful entrepreneur, to be sure.

Starting a business involves risk, but not in the Ready, Fire, Aim sort of way. Take the smallest risk that will accomplish your objective. Consider carefully, then act decisively.

In every product or service there are one or more points where the rubber meets the road, where the deliverable value actually gets created. I call these “core value add”.

• For a doctor in might be the moment when she connects the dots to diagnose the patient’s disease.
• For a plumber, when he removes the clog from the drain.
• For a manufacturer, when raw materials come together to form something worth more than it’s parts.
• For a salesperson, when a prospect is influenced to become a buyer.
• For an inventor, when he see his idea through to become a prototype that works.
• For a leader, it’s when her followers achieve more than they thought possible.
• For a designer, it’s when he creates something delightful and new.

In recent decades I think it became almost fashionable to be in a business where all the high-value-add parts of the product or service where outsourced. Outsource manufacturing to a company in Asia. “Outsource” capital investment by borrowing from a bank. Outsource sales to an independent rep firm. Sometimes I think this leaves a company without a compelling answer to the question “what do your customers pay you to do?”.

I propose a simple rule. Over time, gross margin cannot exceed value add. In other words, you can’t expect to markup the price more than the value you add, not for long. I know this is incredibly old fashioned and so not 1999, but I am sticking to it.

In this day and age of abundant choices and limited cash, customers simply don’t want to pay you a lot to do a little. If you don’t add enough value to earn your keep, the market is going to find a way to do without you, or at least give you a pay cut. This economic environment is hard on every business, but it’s brutal to the businesses we can painlessly do without because they weren’t adding much value.

I like watching “Dirty Jobs” on the Discovery Channel because Mike Rowe is always visiting businesses that do tons of core value add. Like a farm that breeds, feeds, and packages fishing worms. Or a factory that builds train engines. These jobs lack glamor, but they are very “rubber meets the road” kind of jobs. They have earned the right to a solid markup because they are adding solid value.

The only way to succeed long-term without a big value add is to 1) add only a small markup, 2) be very cost-efficient, and 3) do a huge volume. (In other words, be Wal-Mart.)

I’m not against outsourcing. Outsourcing to someone who can do it better, add a markup, and still do it cheaper, that’s a good thing. But if someone can do everything you do better and cheaper than you can, you’re in big trouble.

To all you high-value-add types out there who feel a little old-fashioned and inferior for not outsourcing and financially engineering your way to an easier, more glamorous ride — I say good for you. We will keep paying for what you do, because even in this economy, we’d miss the value you add if you stopped.

Relationships thrive on generosity. Fair is not good enough.

If each side is willing to give only as much as the other, it won’t work. A negative spiral of giving less and less will result, because some of what you give is lost in translation. Some words and actions go unnoticed or unappreciated for one reason or another. Because of this “lossiness” of relationships, both sides need to give more than their half to equal a whole.

Generosity is the alternative. Instead of the minimum expectation, give a gift. When both sides feel they are getting more than they deserve, a positive spiral of giving more and more becomes possible. And gratitude is so much more fun than competitive accounting.

Think about a time when someone (person or business) went the extra mile to be generous to you. I’ve experienced a few lately. One was an unexpectedly free meal at a Hyatt. (It’s kind of cool to ask for the check and hear “Oh, you don’t have a check, this one’s on us because we like seeing you in here.”) That’s a lot of goodwill for the cost of a meal.

I experienced this on a higher level through an incredibly generous and meaningful gift of a special watch. It came unexpectedly from a friend who owns a jewelry store. It blew me away. It wasn’t intended in any way as business strategy, it was a personal gift. As I thought about it though, any time I need the best in a jewelry gift, I will turn to that store and I assure you I won’t be haggling about the price!

I want to be generous enough to give more than my half to family, friends, and customers. And I want to have more faith in the power of gratitude.

Last week I was privileged to attend a session by Scott Kuethen on how to hire quality. He is a hiring expert and the CEO of hiring service Flazingo.

Hiring decisions are crucially important, yet relatively infrequent in small business environments. So guys like me enter the all-important hiring process without much practice. Scott, who has 25 years of practice, generously taught us a thorough process for hiring quality. I won’t outline the whole process, but here are my key takeaways and observations.

• Know exactly what you want before you go looking for it. Take the time to define the central mission, responsibilities, outcomes, and requirements of the position first.
• Don’t tell the candidates who you want them to be. A little cynicism is required in the hiring process. If your job posting lists the exact qualifications you want, you will get resumes that magically list those exact qualifications. If you ask questions in the interview like “We really need someone who’s great with Quickbooks. Are you great with Quickbooks?” you are going to get a yes and you won’t learn anything. Don’t say or imply what answers you want.
• Ask behavioral story questions. “Tell me about a time when you had to confront an colleague about something they did that wasn’t right.” Not what would you do in this situation, but what did you do. Then ask questions to probe deeper into that story. Very few people can put together a fake story that holds up, so you will get reality.
• Ask for information that’s not on the resume. Scott recommends sending a questionnaire to about 9 to 12 candidates you’re interested in. He says people get a lot of help with resumes, but the questionnaire will be their own doing and it brings up information that they wouldn’t have volunteered. Also, the questionnaire screens out people who are curious about the job and fired off a resume but are not interested enough to put any work into applying.
• Be warm in person, and skeptical later. A warm, positive interaction with candidates will bring out more honest answers than a tense, skeptical interaction will. Save your skepticism for the evaluation and verification process after the interview.
• My overall conclusion: Hiring well is a lot of work. It takes a big investment of time to map out the mission, responsibilities, and requirements for the position, attract interest from candidates, score resumes, and conduct effective interviews. I wanted to think of hiring as just another task in the day, but it’s more analogous to designing a new product or building new infrastructure. It’s a big investment up front that pays off (or costs) over the long term.

Lately it seems like everything I want to do to grow to the next level collides with all kinds of anxious resistance in me.

I feel like a little kid who grew up in the jungle, in a little clearing. All my life I was scared, constantly on guard against what might jump into the clearing and attack me. I didn’t sleep well, I didn’t have fun, I just stayed on guard, circling and looking in all directions for danger.

Then I got some help from some good people and I found the clearing is not as dangerous as I thought. So I started to relax and enjoy life a little more. That was scary, but I was working through it.

But now, now people are telling me I need to LEAVE THE CLEARING. Try new things. Delegate. Outsource. Engage. Take risks on purpose. Depend on other people to take care of important things. (What is the matter with you people. Don’t you know it’s dangerous out there!)

So here I am a scared little kid, wooden sword in hand, wide-eyed and shallow-breathing, inching into the jungle trying desperately to be brave but feeling stomach-turning waves of anxiety every time a twig snaps. I want to go back to the clearing. I want to dig a hole and crawl underground and cover it with a lid to keep out the scary world.

Sitting in my foxhole, I know God made me for more than this. I know He gave me potential to do big things in parts of the jungle I’ve never seen. I really want to get brave and go see what’s out there. Maybe beyond the thick of the jungle there are sweeping plains and powerful mountains, peaceful rivers and breathtaking oceans. Scared as I am, I cannot ignore God’s call to what’s beyond. I can’t stay here.

To my friends who feel the same fear and hear the same calling, let’s not creep through the jungle alone. I’m not brave enough to head out there by myself. Let’s form a posse and help each other through the tangles and give each other courage to do the brave things we think we cannot do.